"I am actually not at all a man of science, not an observer, not an experimenter, not a thinker. I am by temperament nothing but a conquistador--an adventurer, if you want it translated--with all the curiosity, daring, and tenacity characteristic of a man of this sort"

Still, this paper has received quite a lot of attention in the mainstream press and blogosphere where the analysis has been largely positive, so I bring it to you with the usual prescription: Draw your own conclusions.

You can get the paper here, read the press release from Leicester University below, and the press release from the Publishers Sage here.

Award-winning University of Leicester academic identifies 'manic behavior' in the financial world

Western economies displayed the same kind of manic behaviour as psychologically disturbed individuals in the run up to the 2008 credit crisis -- and it could happen again, according to a new study.

Bankers, economists and politicians shared a "manic culture" of denial, omnipotence and triumphalism as they threw caution to the wind, says Professor Mark Stein, the award-winning academic from the University of Leicester School of Management.

Observing - but not heeding - the warning signs from the collapse of the Japanese economy in 1991 and the 1998 crisis in south-east Asia, the financial world in the West went into an over-drive of denial, escalating its risky and dangerous lending and insurance practices in a manic response, he says.

Professor Stein, who has today (June 7) been awarded the iLab prize for innovative scholarship, identifies and describes this manic behaviour in the 20-year run up to the credit crisis in a paper published in the Sage journal Organization.

The causes of the banking collapse that plunged the UK and many other countries into recession have been well documented but an important question remains: Why did economists, financiers and politicians fail to anticipate it?

Professor Stein argues that the financial world was suffering from collective mania in the two decades running up to the events. "Unless the manic nature of the response in the run up to 2008 is recognised, the same economic disaster could happen again," he warns.

He defines the manic culture in terms of the four characteristics of denial, omnipotence, triumphalism and over-activity. "A series of major ruptures in capitalist economies were observed and noted by those in positions of economic and political leadership in Western societies. These ruptures caused considerable anxiety among these leaders, but rather than heeding the lessons, they responded by manic, omnipotent and triumphant attempts to prove the superiority of their economies."

The massive increase in credit derivative deals, industrializing credit default swaps and the removal of regulatory safety checks, such as the repeal in the United States of the landmark Glass-Steagall banking controls were a manic response to the financial crises within capitalism," he says.

Professor Stein's award-winning research paper - A culture of mania: a psychoanalytic view of the incubation of the 2008 credit crisis – says this behaviour was also strengthened by "triumphant" feelings in the West over the collapse of communism.

"Witnessing the collapse of communism, those in power in the West developed the deluded idea that capitalist economies would do best if they eschew any resemblance to those communist economies, thereby justifying unfettered financial liberalization and the destruction of the regulatory apparatuses of capitalism. The consequences of this manic response have been catastrophic, with the on-going eurozone crisis being - in many ways - a result of this," he says.

"Whether one examines the actions of banks and hedge funds, or the limitations of ratings agencies, auditors, regulators and governments, a more worrying and deeper question emerges concerning why so many parties, more or less simultaneously, were implicated in such unprecedented and extreme risk-taking."